IN THIS ISSUE:

? It?s Getting Ugly Out There

? Durbin Hides GAO Malpractice Report During Senate Debate

? GAO Report ?Vindicates? Malpractice Reformers

? Keeping Those Blinders On

? Malpractice Risks Raise Health Care Costs

? Malpractice Reform AMA?s Top Goal

? Boutique Medicine ? Not Just for the Wealthy Anymore

? Mandate-Free Coverage Enacted in Texas

It?s Getting Ugly Out There

My last newsletter prompted a retort from a reader:

“Ya otta shut up. You’re a free market hack with a typical conservative superior attitude that’s based on nothing. If the damn free market worked so well in this area, we wouldn’t have tens of millions of Americans without health coverage. You guys kill me – you look a wholly broken system and you want the folks that broke it to fix it by doing more of the same. Christ, get a real job. Produce something, provide a service, do something. The above referenced article is not something an adult writes.”

When I tried to reply to his e-mail to explain that actually I am working hard to change this system, it turned out that the address was no longer valid. I won?t print the bad e-mail address since he was probably hacking into someone else?s identity.

Durbin Hides GAO Malpractice Report During Senate Debate

It isn?t just the rare oddball who is going over the edge. Senator Richard Durbin (D-IL) requested that the General Accounting Office (GAO) conduct a study on the causes of malpractice insurance premiums. He was trying to verify the trial lawyers? argument that premiums are up because of insurer?s investment losses and profiteering in time for a Senate floor debate on S.11, the tort reform bill. [On July 9, the Senate failed by a 49-48 vote to bring the measure up for full consideration. Senate Majority Leader Bill Frist promised another vote on the medical liability measure this fall.] Alas, the GAO report concluded that malpractice claims (not investment losses) ?appear to be the primary driver of rate increases in the long run.? Although Mr. Durbin received the report on June 27, he kept it a secret during the debate, but it was finally released by the GAO a month later.

SOURCE: http://www.gao.gov/cgi-bin/getrpt?GAO-03-702 (full report)

http://www.gao.gov/highlights/d03702high.pdf (one page summary)

http://biz.yahoo.com/prnews/030729/dctu051_1.html (PIAA press release)

GAO Report ?Vindicates? Malpractice Reformers

The “Las Vegas Review Journal” concluded the GAO report, ?should vindicate physicians who have argued that frivolous lawsuits and exorbitant jury awards? were behind the crisis.? The editorial goes on to point out the GAO found two states where premiums dropped between 1998 and 2002 ? California which has a $250,000 cap on non-economic damages and Minnesota which has limited joint and several liability. The paper concludes, ?The report?s findings clearly indicated that moves to rein in excessive jury awards and to limit joint and several liability should significantly slow the rise in malpractice insurance premiums.?

SOURCE: http://www.reviewjournal.com/lvrj_home/2003/Jul-30-Wed-2003/opinion/21835076.html

Keeping Those Blinders On

But a so-called ?consumer group? chose to overlook the thrust of the GAO report, and listed claims losses as just the fourth on a list of items that all contribute to rising malpractice premiums. Number one (on their list) is declining investment income, followed by decreased profitability, and increasing reinsurance rates. The group says, ?After a decade of strong profitability, insurers turned their back on their policy holders when the economy bottomed out.? This group ignores another conclusion of the GAO that, ?Physician-owned and/or operated insurers now cover around 60 percent of the market (and) self-insurance has become more widespread?? If the Docs own the insurance companies and the insurance companies cover the Docs, it is hard to see how physicians would be ?turning their backs? on themselves.

SOURCE: http://releases.usnewswire.com/printing.asp?id=103-07282003

Malpractice Risks Raise Health Care Costs

Of course, rising malpractice premiums aren?t the only consequence of lawsuit abuse. An article in the Columbia, SC “State” quotes local insurance agent Don Gordon as saying, ?The real thing that?s driving the increase in health care costs is doctors ? running every test that?s available. If anything ever goes wrong, the doctor can say, ?I did everything I could.?? At the same time, the physicians get little resistance from patients because, ?Consumers want the very best service available, but they want someone else to pick up the tab,? according to William Shrader, chief actuary at the South Carolina Blues. He adds, ?The solution is getting people to understand what they?re getting and what the costs are.? The article suggests medical savings accounts as one of several ways to keep costs in line.

SOURCE: http://www.thestate.com/mld/thestate/business/6453061.htm

Malpractice Reform AMA?s Top Goal

Meanwhile, the chair of the AMA Board of Trustees reports that, ?Our No. 1 legislative priority continues to be federal medical liability reform.? He says Wyoming has just been added to the AMA?s list of ?crisis states,? bringing the total to 19 states. He says the vote on S. 11, though it fell short of a filibuster-proof majority, ?now shows which legislators are content to allow patient access to care to suffer because of our broken medical liability system.? Other legislative priorities for the AMA include Medicare reform ? ?The growing trend of physicians not accepting new Medicare patients is a sobering reality? ? and a push by managed care organizations to cap physician payments ? ?History provides overwhelming evidence that price controls never work.? Unfortunately, not named among the AMA priorities are MSA expansion, tax credits for the uninsured, or much of anything beyond the physician payment issues. At least we can be thankful that the so-called ?patients bill of rights? is finally off the list of topics the AMA wants to waste time on.

SOURCE: http://www.ama-assn.org/sci-pubs/amnews/amn_03/edca0804.htm

Boutique Medicine ? Not Just for the Wealthy Anymore

One strategy some physicians are using to increase their incomes in spite of all the Medicare and managed care restrictions is moving to ?retainer medicine? or ?boutique medicine.? Mike Norbut writes in the “AMNews” that more physicians are targeting middle-class patients with new services. He cites Seattle internist Daniel Frank, MD, who charges $99/month for a host of extra services and attention. The article says the movement is going mainstream ? ?The $20,000 annual fees that were characteristic of the first practices are far outnumbered by those that charge between $1,000 and $1,500 a year,? or the price of a daily ?Grande Iced Caffe Mocha at Starbucks.? While the practice has drawn fire, especially in Congress where bills have been introduced ?that would prohibit physicians from charging retainer fees to Medicare patients,? the AMA House of Delegates decided at its annual meeting in June, ?that the practice was ethically acceptable provided that physicians follow certain guidelines such as being available for all emergencies, providing the same level of care regardless of the patient?s membership status, and giving the patient the chance to opt out of a contract without penalty.?

SOURCE: http://www.ama-assn.org/sci-pubs/amnews/pick_03/bisa0804.htm

Mandate-Free Coverage Enacted in Texas

Finally, the ?San Antonio Business Journal? reports on two bills that have been enacted in Texas. One (SB541) allows small employers to purchase coverage without complying with most of Texas? 67 mandates (it retains eight of them). The other (SB10) allows state associations to provide health coverage to its members, but requires that the whole association be rated together instead of by individual companies. It dumps even more mandates than the House bill. A local Consumers Union spokeswoman says, ?I would expect nearly all the small employers who are currently offering health insurance are going to run to these co-ops where they can join forces with more employers and offer a scaled-back plan for less money.? (This is supposed to be a criticism, but it sounds like an endorsement to me). Humana?s spokesman Eric Glenn says, “I like to view this as a great entry point for employers that have been previously kept out of this market.? He adds, ?I would expect Humana and others to have products available on January 1 (2004).?

SOURCE: sanantonio.bizjournals.com

Please send all comments/questions directly to me at gmscan@aol.com.

“Consumer Choice Matters” is a free weekly newsletter published by the Galen Institute, a not-for-profit public policy organization specializing in research and education on health policy. Visit our website at http://www.galen.org for more information.

If you wish to subscribe/unsubscribe or update your address, please send an e-mail to galen@galen.org.

The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.

IN THIS ISSUE:

? It?s Getting Ugly Out There

? Durbin Hides GAO Malpractice Report During Senate Debate

? GAO Report ?Vindicates? Malpractice Reformers

? Keeping Those Blinders On

? Malpractice Risks Raise Health Care Costs

? Malpractice Reform AMA?s Top Goal

? Boutique Medicine ? Not Just for the Wealthy Anymore

? Mandate-Free Coverage Enacted in Texas

It?s Getting Ugly Out There

My last newsletter prompted a retort from a reader:

“Ya otta shut up. You’re a free market hack with a typical conservative superior attitude that’s based on nothing. If the damn free market worked so well in this area, we wouldn’t have tens of millions of Americans without health coverage. You guys kill me – you look a wholly broken system and you want the folks that broke it to fix it by doing more of the same. Christ, get a real job. Produce something, provide a service, do something. The above referenced article is not something an adult writes.”

When I tried to reply to his e-mail to explain that actually I am working hard to change this system, it turned out that the address was no longer valid. I won?t print the bad e-mail address since he was probably hacking into someone else?s identity.

Durbin Hides GAO Malpractice Report During Senate Debate

It isn?t just the rare oddball who is going over the edge. Senator Richard Durbin (D-IL) requested that the General Accounting Office (GAO) conduct a study on the causes of malpractice insurance premiums. He was trying to verify the trial lawyers? argument that premiums are up because of insurer?s investment losses and profiteering in time for a Senate floor debate on S.11, the tort reform bill. [On July 9, the Senate failed by a 49-48 vote to bring the measure up for full consideration. Senate Majority Leader Bill Frist promised another vote on the medical liability measure this fall.] Alas, the GAO report concluded that malpractice claims (not investment losses) ?appear to be the primary driver of rate increases in the long run.? Although Mr. Durbin received the report on June 27, he kept it a secret during the debate, but it was finally released by the GAO a month later.

SOURCE: http://www.gao.gov/cgi-bin/getrpt?GAO-03-702 (full report)

http://www.gao.gov/highlights/d03702high.pdf (one page summary)

http://biz.yahoo.com/prnews/030729/dctu051_1.html (PIAA press release)

GAO Report ?Vindicates? Malpractice Reformers

The “Las Vegas Review Journal” concluded the GAO report, ?should vindicate physicians who have argued that frivolous lawsuits and exorbitant jury awards? were behind the crisis.? The editorial goes on to point out the GAO found two states where premiums dropped between 1998 and 2002 ? California which has a $250,000 cap on non-economic damages and Minnesota which has limited joint and several liability. The paper concludes, ?The report?s findings clearly indicated that moves to rein in excessive jury awards and to limit joint and several liability should significantly slow the rise in malpractice insurance premiums.?

SOURCE: http://www.reviewjournal.com/lvrj_home/2003/Jul-30-Wed-2003/opinion/21835076.html

Keeping Those Blinders On

But a so-called ?consumer group? chose to overlook the thrust of the GAO report, and listed claims losses as just the fourth on a list of items that all contribute to rising malpractice premiums. Number one (on their list) is declining investment income, followed by decreased profitability, and increasing reinsurance rates. The group says, ?After a decade of strong profitability, insurers turned their back on their policy holders when the economy bottomed out.? This group ignores another conclusion of the GAO that, ?Physician-owned and/or operated insurers now cover around 60 percent of the market (and) self-insurance has become more widespread?? If the Docs own the insurance companies and the insurance companies cover the Docs, it is hard to see how physicians would be ?turning their backs? on themselves.

SOURCE: http://releases.usnewswire.com/printing.asp?id=103-07282003

Malpractice Risks Raise Health Care Costs

Of course, rising malpractice premiums aren?t the only consequence of lawsuit abuse. An article in the Columbia, SC “State” quotes local insurance agent Don Gordon as saying, ?The real thing that?s driving the increase in health care costs is doctors ? running every test that?s available. If anything ever goes wrong, the doctor can say, ?I did everything I could.?? At the same time, the physicians get little resistance from patients because, ?Consumers want the very best service available, but they want someone else to pick up the tab,? according to William Shrader, chief actuary at the South Carolina Blues. He adds, ?The solution is getting people to understand what they?re getting and what the costs are.? The article suggests medical savings accounts as one of several ways to keep costs in line.

SOURCE: http://www.thestate.com/mld/thestate/business/6453061.htm

Malpractice Reform AMA?s Top Goal

Meanwhile, the chair of the AMA Board of Trustees reports that, ?Our No. 1 legislative priority continues to be federal medical liability reform.? He says Wyoming has just been added to the AMA?s list of ?crisis states,? bringing the total to 19 states. He says the vote on S. 11, though it fell short of a filibuster-proof majority, ?now shows which legislators are content to allow patient access to care to suffer because of our broken medical liability system.? Other legislative priorities for the AMA include Medicare reform ? ?The growing trend of physicians not accepting new Medicare patients is a sobering reality? ? and a push by managed care organizations to cap physician payments ? ?History provides overwhelming evidence that price controls never work.? Unfortunately, not named among the AMA priorities are MSA expansion, tax credits for the uninsured, or much of anything beyond the physician payment issues. At least we can be thankful that the so-called ?patients bill of rights? is finally off the list of topics the AMA wants to waste time on.

SOURCE: http://www.ama-assn.org/sci-pubs/amnews/amn_03/edca0804.htm

Boutique Medicine ? Not Just for the Wealthy Anymore

One strategy some physicians are using to increase their incomes in spite of all the Medicare and managed care restrictions is moving to ?retainer medicine? or ?boutique medicine.? Mike Norbut writes in the “AMNews” that more physicians are targeting middle-class patients with new services. He cites Seattle internist Daniel Frank, MD, who charges $99/month for a host of extra services and attention. The article says the movement is going mainstream ? ?The $20,000 annual fees that were characteristic of the first practices are far outnumbered by those that charge between $1,000 and $1,500 a year,? or the price of a daily ?Grande Iced Caffe Mocha at Starbucks.? While the practice has drawn fire, especially in Congress where bills have been introduced ?that would prohibit physicians from charging retainer fees to Medicare patients,? the AMA House of Delegates decided at its annual meeting in June, ?that the practice was ethically acceptable provided that physicians follow certain guidelines such as being available for all emergencies, providing the same level of care regardless of the patient?s membership status, and giving the patient the chance to opt out of a contract without penalty.?

SOURCE: http://www.ama-assn.org/sci-pubs/amnews/pick_03/bisa0804.htm

Mandate-Free Coverage Enacted in Texas

Finally, the ?San Antonio Business Journal? reports on two bills that have been enacted in Texas. One (SB541) allows small employers to purchase coverage without complying with most of Texas? 67 mandates (it retains eight of them). The other (SB10) allows state associations to provide health coverage to its members, but requires that the whole association be rated together instead of by individual companies. It dumps even more mandates than the House bill. A local Consumers Union spokeswoman says, ?I would expect nearly all the small employers who are currently offering health insurance are going to run to these co-ops where they can join forces with more employers and offer a scaled-back plan for less money.? (This is supposed to be a criticism, but it sounds like an endorsement to me). Humana?s spokesman Eric Glenn says, “I like to view this as a great entry point for employers that have been previously kept out of this market.? He adds, ?I would expect Humana and others to have products available on January 1 (2004).?

SOURCE: sanantonio.bizjournals.com

Please send all comments/questions directly to me at gmscan@aol.com.

“Consumer Choice Matters” is a free weekly newsletter published by the Galen Institute, a not-for-profit public policy organization specializing in research and education on health policy. Visit our website at http://www.galen.org for more information.

If you wish to subscribe/unsubscribe or update your address, please send an e-mail to galen@galen.org.

The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.